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Sunshine Weekly Weeder Newsletter

13 April 2017

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All Gardeners Meeting - Mark your calendar

Saturday, May 20th - 10:00 am

Agenda:

Election of new officers.

Rate Increase discussion and member ratification vote.

Other site change rules discussion and member ratification vote. More
details to come.

All Gardeners Ice Cream Social - Save the date!

At SCG - Sunday, May 7th, 3:00 pm

Celebration of:

Say goodbye to longtime gardener Nancy Siebert. She has been at
Sunshine over 20 years, serving as president, vice president and
chairperson of the plant sale. She was also instrumental in establishing
the Micah 6 food bank garden. Her contributions and hard work have
contributed to the success of Sunshine.

First, let me say that I appreciate all of the hard work that the
Sunshine board does on behalf of our garden. While I do disagree with
the board on this topic, I do thank them for their efforts. I do not
agree with their plan to raise fees and respectfully offer up the
following arguments against the plan in the form of questions.

Q: Don't we need to raise our rates?

A: We're being asked to vote to increase our fees at a time of record
surplus for our organization. We have $110,000 in savings and $49,500
in checking as of 3/31/17. It's been estimated that our savings
represents 2.5 years of operating expenses. Before we vote, we need to
really examine why we're being asked to raise our fees given such
large cash reserves.

Q: What about the issue of financial security mentioned in last
week's Weeder?

A: Two and a half years of operating expenses seems like a good deal
of security to me. We have two main sources of revenue, plot fees and
plant sale revenue. Plot fees are exceedingly stable. Our plots are
fully rented year-round and collect roughly $17,000 annually from
membership fees. The waiting list has mostly been steady at roughly
60+ prospective gardeners at all times. We have had a robust waiting
list for many years. The annual plant sale has been making a steady
profit for years. This year, we took in roughly $47,400. Our net last
year was roughly $21,000 and we'll probably do about the same this year.
We've had some rough weather around the plant sale, but we have still
managed to make a sizeable profit each year. Even if we had a couple
of bad years or more, we would still not run out of money, and if we
did, we could do something about it then.

Q: Why is the argument about "the time for a fee increase is when
times are good not after there is a crisis" invalid in your opinion?

A: The comment that it's always better to raise money during good times
is not relevant to our situation. Increasing profits in a for-profit
business is inherently a good thing. For example, a business can continue
to raise prices as long as there is strong demand for its products, but
raising prices when there is not drives away customers. This is not
relevant to our situation since increasing profits in a non-profit
business is not the inherent goal. Actually, nonprofits do well raising
money during crises. Witness any fund drive after a major catastrophe.

Q: What could Sunshine do if we had large unexpected expenses?

A: If Sunshine did have a financial crisis, the board would have
several possible ways in which it could weather it. It could dip into
its large cash reserves and make up the deficit in the operating budget.
There would then be the option to raise fees during the next year to
replace any reserves. Alternatively, or in conjunction, it might ask
the members for permission assess a one-time fee to raise money from
its members immediately. The board could ask for donations from its
members or the general public. Lastly, the garden could hold a fundraiser
or reduce its contribution to other entities. I'm sure that you may be
able to think of other ways that we could bring in money if we suffered
a financial crisis severe enough to warrant action. If we did have a
financial crisis and ultimately needed to raise fees, I am sure that
everyone would agree that it would be appropriate to do so. Raising
fees with 2.5 times our annual budget in the bank now just doesn't
make sense.

Q: What is unprecedented about the proposed rate increase?

A: The unusual step to this proposal is that rates would go up in
August of this year and then again two years from now, assuming that
the general membership approves this measure. That action makes it
harder for the next board to eliminate the second rise because they
would have to go back to the membership and ask to not raise fees.
Why step on the toes of the incoming board?

Q: How much reserves is recommended for nonprofits to have?

A: From the Knowledge Base FAQ of Grantspace.org:

A commonly used reserve goal is 3-6 months' expenses. At the high end,
reserves should not exceed the amount of two years' budget. At the low
end, reserves should be enough to cover at least one full payroll.

However, each nonprofit should set its own reserve goal based on its
cash flow and expenses. Organizations that have contracts or fees with
regular and reliable payments don't need as much in cash reserves as
organizations that rely on periodic grants, fundraising events or
campaigns, or seasonal activities.

Q: How does our income and expenses in the 2016 budget compare to the actual values?

A: We are very good at estimating our income (1% difference), but we
are not so good at estimating our expenses. We spent $9500 less than we
budgeted. We seem to have overestimated expenses in several categories.
In fact, we typically spend less than we take in, which is why we have
such a large reserve.

Q: Why do you think our budget is as high as it is?

A: I question the need to raise fees when we have been using our
substantial savings as justification for spending more money. For
example, when I was on the board, our substantial savings were used
multiple times as justification for funding projects such as sending
people to the annual ACGA conference. In fact, the board decided last
year to sponsor members of another community garden to attend the
conference. I can't help feeling that our spending is definitely
influenced by our large savings account. While I support such
educational projects, it seems unfair to raise fees to pay for
projects that get approved because we are feeling flush due to our
savings. We should spend some of our savings to finance projects, not
raise fees.

Q: Will raising the fees for our members hurt them financially?

A: Probably mostly no, but definitely yes for some people. Many of our
members are retirees living on fixed incomes. Others are young people
just getting started. I am the plot coordinator, and as such, I often
communicate with people who are either leaving the garden membership or
becoming members. I can tell you that we are definitely losing some
current and prospective members due to financial difficulties. While
the number may not be high, it seems unfair to raise prices when some
members are having trouble paying our fees. Some prospective members
have not been able to come up with the money needed to join.

Q: Can't we make exceptions for people in financial need and waive
their fees?

A: We currently more or less automatically waive fees for a handful
of needy gardeners. However, if people have to ask for waivers, they
are not very likely to do it because it is humiliating. Do we
automatically grant the waivers, or make them prove their income? It
very quickly becomes a sticky situation. If we don't raise our fees,
there will be less of a need to grant waivers. I realize that most of
us will be able to afford the increases, but I ask that you please
consider those on a fixed or low income and vote against the fee
increase. Additionally, we largely did away with paying seasonally to
reduce the workload and raising fees can make it even harder for
people to come with the full amount at one time. Let's make Sunshine
more inclusive and not less inclusive

.

Q: What about the graph in last week's Weeder? That was a pretty
steep slope!

A: A minor point, but the graph presented in the Weeder is misleading
in terms of the magnitude of the deficit because it does not start at
zero on the Y axis. Here's a graph that uses the appropriate Y axis:

Q: What have you heard about Sunshine from other community gardeners?

A: One, that it is impossible to get a plot here or, at least, takes
years (not true). Two, that it's full of people who can't garden in
their yards because they're too shady (mostly true). What a great
problem to have! Many other gardens are full of people who have no
other place to garden. A sizeable portion of our members also have
no other place to garden. If we raise our fees, we are making
ourselves less inclusive and perpetuating our image of exclusivity.

Q: What is our real insecurity, if not financial?

A: Our real issue is land security, not money. If TSBVI ever asks us
to move, the extraordinarily high cost of land in Austin would
seemingly prevent us from buying land near our current location.
Renting is also probably out, as land prices would put pressure to
develop any currently undeveloped land. I can see that we might be
able to work with Austin's community garden coordinator to locate
city land within the floodplain to locate a suitable piece of land,
but hopefully, that is at least a few years down the road. If we
were to end on up city property, we would likely be restricted to
what we could do to alter the property, so it's unclear how much
money we would need. However, I do not see the wisdom of raising
our membership fees now to pay for a nebulous future.

Answers to questions in last weeks Weeder on rate increase from the SCG board

While we recognize that all members love
Sunshine Community Gardens and want it to be sustainable into the
future, we know there are dissenting opinions about the rate increase.
Please feel free to submit your opinions to the Weeder at
pporter_scg@austin.rr.com so
that we can have a frank and open debate. With the intention of being
as transparent as possible, more financial information is available on the
web page.

Q: We have gone decades without a rate increase. Why now?

A: In the past, we have either been sponsored by another organization
or have had multiple financial crises. Now that we are a stand-alone
non-profit, we must take care of ourselves. A part of financial
stewardship is to look forward to make sure our revenues are keeping
up with expenses and we are not caught off-guard. This is a responsibility
shared by the board and the members.

Q: Why do the rate increases begin in August?

A: Since this is a decision that affects all of the membership, we
want to schedule the vote at the annual All-Gardeners Meeting on May
20 to get maximum participation. August 1 is the start of the Fall
season. If the new rates are approved by the membership, they will
be effective at the start of the next season. Only new gardeners will
pay the increased rates until the Spring annual billing which is due
on February 1, 2018.

Q: What expenses will increase for us in the future? Why doesn't
the analysis detail the line-item expenses to justify the increase?

A: We agree that it would be very helpful to know what our costs will
be in the future. It would also be helpful to know how much rain will
fall and when. All we know for sure is that the Consumer Price Index
is 3% and that we need to be prepared for our costs to increase by at
least that much. If we wait until we know about cost increases on a
line-item basis, it will be too late to increase revenues from our
annual billing. That said, we do know that we have had rate increases
this year in the trash contract and trailer utilities. The City of
Austin raised the commercial water rate in November of 2016, and there
is a strong probability those rates will increase again in the next
five years. The water and utility expenses are over 40% of our budget.

Q: Why do we need a large reserve?

A: We are fortunate to have about 2.5 years of expenses in our reserve
fund ($110,000). The guidelines for non-profits suggest reserves of 2-3
years, especially if revenues depend on only one or two fundraisers
during the year and expenses are heavily influenced by weather. The
rate increase will help maintain those reserves. Small organizations
like ours have more risk and are more vulnerable to uncontrollable
factors. One or two adverse events could wipe us out if we do not have
an adequate cushion.